Senegal - Investment Promotion (Third SOFISEDIT) Project

Document of The World Baik FILE COPY FOR OFFICIAL USE ONLY Repor No. P-2972a-SE REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS OF THE BANK AND OF THE ASSOCIATION AND TO THE BOARD OF DIRECTORS OF THE CORPORATION ON A PROPOSED LOAN BY THE BANK TO SOCIETE FINANCIERE SENEGALAISE POUR LE DEVELOPPEMENT DE L'INDUSTRIE ET DU TOURISME WITH THE GUARANTEE OF THE REPUBLIC OF SENEGAL ON A PROPOSED DEVELOPMENT CREDIT BY THE ASSOCIATION TO THE REPUBLIC OF SENEGAL AND ON AN INVESTMENT BY THE CORPORATION IN SOCIETE FINANCIERE SENEGALAISE POUR LE DEVELOPPEMENT DE L'INDUSTRIE ET DU TOURISME FOR AN INVESTMENT PROMOTION PROJECT March 30, 1981 This document has a restricted distribution and may be used by melpients only In the performance of their offcial duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENT Currency Unit CFA Franc (CFAF) US$1 - CFA 235 CFAF 1 million - US$4,255 The CFA Franc is pegged to the French Franc at the fixed rate of CFAF1 - FF0.02 and floats vis-a-vis the US dollar. FISCAL YEAR Government and SONEPI July 1 - June 30 SOFISEDIT = October 1 - September 30 ABBREVIATIONS BADEA Banque Arabe pour le Developpement Economique de I'Afrique BCEAO Banque Centrale des Etats de l'Afrique de l'Ouest BHS Banque de l'Habitat du Senegal BIAO Banque Internationale pour lAfrique de l'Ouest BICIS Banque Internationale pour le Commerce et l'Industrie - Senegal BNDS Banque Nationale de Developpment du Senegal BOAD Banque Guest Africaine de Developpenent CCCE Caisse Centrale de Cooperation Economique CEAO Commnuaute Economique de V'Afrique de l'Ouest CII Comite Interministeriel des Investissements CSCE Centre Senegalais du Commerce Exterieur CVCCEP Commission de Verification des Comptes et de Controle des Etablissements Publics DEG Deutsche Entwicklungsgesellschaft EEC European Economic Community KfW Kreditanstalt fur Wiederaufbau MIDA Ministere du Developpement Industriel et de l'Artisanat ONCAD Office National de Cooperation et d'Assistance au Developpement SGBS Societe Generale de Banque au Senegal SOFISEDIT Societe Financiere Senegalaise pour le Developpement de l'lndustrie et du Tourisme SONAGA Societe Nationale 4'Assistance et de Garantie SONEPI Societe Nationale d'Etude et de PromDtion Industrielle SOSEPRA Societe Senegalaise pour la Promotion de l'Artisanat SSE Small- and Medium-Scale Enterprises TCR Taxe de Cooperation Regionale TPS Taxe sur les Prestations de Service USB Union Senegalaise de Banque  FOR OFFICIAL USE ONLY REPUBLIC OF SENEGAL INVESTMENT PROMOTION PROJECT Loan, Credit, Investment and Project Summary Borrowers: Republic of Senegal Societe Financiere Senegalaise pour le Developpement de l'Industrie et du Tourisme (SOFISEDIT) Beneficiaries: SOFISEDIT Societe Nationale d'Etudes et de Promotion Industrielle (SONEPI) Ministry of Industrial Development and Artisans (MIDA) Amount: IFC Investment: CFAF 50 million (about US$250,000 equivalent) IDA Credit: SDR 2.1 million (US$2.5 million equivalent) Bank Loan: US$6.5 million equivalent Terms: IFC Investment: Equity participation in SOFISEDIT IDA Credit: Standard Bank Loan to SOFISEDIT: 18 years including 3 years of graze with a flexible amortization sche,dule, interest at 9.6 percent p.a. and foreign exchange risk carried by Government. Rele nding Terms: SDR 0.8 million to SOFISEDIT as subordinated debenture (IDA Credit) with flexible interest and principal repayments tied to dividends and sales of investments. SDR 1.0 million as grants to SOFISEDIT and SONEPI (for technical assistance). Project Description: The major objective of the project is to assist Senegal's efforts to promote productive investments, notably, in export-oriented industries. To that effect, IFC would par- ticipate in SOFISEDIT's capital increase. In addition, the proposed project would provide: (a) SOFISEDIT with equity and term resources to make sound investments in the industrial, fisheries and tourism sectors; (b) technical assistance to strengthen SOFISEDIT financially and institutionally; (c) support to SONEPI and thereby improve the promotion of small- and medium-scale enterprises; (d) funds to study and identify appropriate changes in Government policies and prc,cedures to enhance productive investments; and (e) training for the Ministry of Industrial Development and Artisans. Benef its and Risks: By providing technical and financial assistance to productive investments, the project would help increase participation of local entrepreneurs in the industrial sector and create employ- ment. In the longer term, the project would build up SOFISEDIT's |This document has a restricted distribution and may be used by recipients only in the performance of |their official duties. Its contents may not otherwise be disclosed without World Bank authorization .  - ii - capacity to promote and supervise efficiently sub-projects in the industrial, fisheries and tourism sectors and help the Government and SONEPI streamline their investment promotion role. The project faces the risks associated with the difficult economic climate of Senegal (reduced market, high production costs) which may discourage entrepreneurs. Estimated Cost: Foreign Local Total --- - --US$ -000--